The Common Stock of Mercury Motors Is Selling for $43

question 74

Multiple Choice

The common stock of Mercury Motors is selling for $43.90 a share.U.S.Treasury bills are currently yielding 3.5 percent.What is the current value of a one-year call option on Mercury Motors stock if the exercise price is $37.50 and you assume the option will finish in the money?

• A)$6.12
• B)$6.40
• C)$6.69
• D)$7.67
• E)$8.01

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Definitions:

Accounts Payable Subsidiary Ledger

A detailed ledger containing all individual creditor accounts, supporting the main accounts payable account by listing individual transactions.

Purchases Journal

A specialized accounting journal used to record all purchasing transactions, particularly on account.

Record Purchase

The accounting process of recording the buying of goods or services in the financial records of a company.

Accounts Receivable Subsidiary Ledger

The subsidiary ledger containing the individual accounts with customers.